Monday, December 31, 2012


It's been a wild and crazy year, hasn't it? Of course, we can say that about every year. True, some events this year were rather horrific but overall my view is that this was a year marked by inflammation.

Inflammation? Taking a page from a late night infomercial, it does seem that we were all mostly irritated this year from the news. Washington was a mess. Fiscal cliff, dairy cliff, ports cliff, election cliff, Supreme Court and ObamaCare, Fox vs MSNBC, here a pain, there a pain, everywhere a pain, pain....

Inflammation is the body's response to injury. I bet mental inflammation is the mind's respond to all the discord we've seen this year. It made my head hurt, that is for sure.

But let me bring this back to the reason anyone actually reads my posts and social media stuff - the markets. This was a year where good news was good and bad news was good because it would prompt the Fed to print more money. And oh how it printed! And Super Mario in Europe could not stand in the shadows as Ben "Chubby Checker" Bernanke twisted the night away. Stocks love free money and rallied. Funny how most of this printing took place just when technical breakdowns were imminent.

But then Jackie Paper grew up and Ben the Magic Dragon's last bellow in September marked the top in the market. Stimulus tipped over its point of diminishing returns as investors finally got wise.

Where do we stand now? Will technical analysis ever work again? Who shot JR?

It seems that with the market's awakening to the meddling, charts seem to work better. But they are still not perfect and one reason is that so many people are using them that many try to game the system. They look for triggers that will sway the crowd and they act the other way when it is shown the crowd is wrong. False chart breakouts. Moving average cross whipsaws. Stuff like that.

I don't think charts will ever work the way they used to work although I still find great value in them. If you understand that the observation of an event actually changes that event then you can act accordingly.

For you physics haters, it is called "Heisenberg Uncertainty Principle" and it concerns measuring events on the atomic level. If you think about how we might measure something by looking at it and then realize that in order to look at something we need light and light particles interact with atomic particles so by shining the light we affect the event.

Let me digress. My 10th grade chemistry teacher told us that we could measure the speed of a horse on a racetrack by shooting marshmallows at it and see how the marshmallows were affected. The horse may say, "hey cut it out" but his speed would be essentially unaffected.

However, if you use bullets to try the same thing you affect the horse's speed all the way.

Clumsily bringing this back to charts, the more people that look at them the more they act on them and the less the charts measure the psychology of the market. They measure the actions of the observers and then become rather useless.

I still believe that charts work but again, not they way they used to work. Individual stock analysis, save for the handful everybody and their brother analyzes, works better than major index analysis. This year, try doing some bottom up analysis - the 500 stocks of the S&P 500 - to formulate an opinion instead of looking at the machinations of the S&P 500 itself. Try using more sentiment analysis. Look into the harder analysis such as cycles instead of trendlines.

Good luck to all in the coming year. Thanks for reading my tirades, digressions and sarcasm. I hope my incessant pop culture references gave you an occasional chuckle.

Wednesday, December 19, 2012

The Cliff

I suppose I am pundit-y enough to have a blog post on the fiscal cliff. You will have to forgive me for not having any posts at all for a while but this country (and world) are messed up right now. The ink was barely dry on news of a mall shooting then we get a school shooting. I am still donating to the Hurricane Sandy relief fund so evil/devil/Satan, can we get a moment to breathe, please?

And in the background, the fiscal cliff. I say background because it's only money. Keep that in perspective.

Fitch has now threatened to downgrade US debt if we go over the cliff.  Despite the pain that will cause, not to mention the pain of cuts and taxes and the recession that will surely follow if they do nothing, I say we should go over the cliff. No, we must go over the cliff or we will never fix this mess.

Politicians are ill-equipped to really fix things because in the short-term they will not get re-elected and their donations will dry up. We need the free market to fix this and that means letting it flush this mess down the pipe once and for all.

Will it hurt real people? You bet it will. But they are being killed by a thousand cuts already from zero return on savings to getting taxed on taking a #@$% to being regulated to death.
Do this, don't do that, can't you read the sign?
- Sign, Five Man Electrical Band (1970)...covered by Tesla in 1990

What do they have on the table? Slowing down the growth of government, not shrinking it. This will not fix things so please bring on the invisible hand. No, not of god but of the free market. Not familiar with that term?
Here's your definition: A metaphor conceived by Adam Smith to describe the self-regulating behavior of the marketplace.
The economy right now is like a stuffed up colon. Clogged and in need of a good financial enema. Please politicians, stop trying to treat it with aspirin to block out the pain. Pain is there for a reason.

Monday, December 10, 2012


The working title for today's Barron's Online column was "Reanimated Tech Stocks for Christmas." It was about how several tech stock that were left for dead have been resurrected and may be good opportunities. You'll have to read the column to see what they were. Can't give away the store otherwise Rupert would have no need to pay me.

There is one stock I did not include in the list, mostly because we have editor-imposed space limits.Yes, theoretically the online limit is whatever I can write but realistically nobody is going to wade through a 3000 word piece.

What stock? Well, if you read the title of this post you know. The betamax of search engines, Yahoo, is on the mend. Remember those campy commercials with the eskimo family ordering a hot tub? or the Eastern European dating service with the monkey and the toucan? Yahoooooo-oooo! Yes, fun but we all now google and bing stuff, don't we.

Anyway, check out this weekly chart.

Yahoo is now at the top of a long base, if not slightly through it. I think that it needs a little rest here as momentum driven rallies do tend to fail. Just look at the last two tries above. But overall not too shabby.

And now look at weekly RSI. A quote:
"The most bullish thing a stock can do is get overbought and stay that way."
- Alan Shaw, CMT (former TA boss at Smith Barney)
Disclosure - I own some.

Friday, November 30, 2012

Venom to Spirit Air

Two weeks ago, my wife and I had a nice little fight about an upcoming trip to visit a college with my daughter. A big part of it had to do with Spirit Airlines being the only option for the trip. I hate Spirit. No, really, I hate it. I did not want to fly anywhere on this cut rate, cut service, cut dignity airline.

But we parents make sacrifices for our kids and I bit the bullet (lead side in my mouth but it dangit it did not go off).

The one and only other time I flew Spirit was to Florida with the whole family of five, including a toddler. Nightmare making reservations (pay to book a seat? really?). I had a cow to the supervisor over that one saying there was no way I would risk getting my family split up with their randomly assigned seating. He relented.

LaGuardia is a dump. Well, at least Spirit's gate at this old NY airport is a dump. Why was AirTran's and jetBlue's adjacent gates so inviting while Spirit's was dreary and crowded. Imagine getting the call to board with a stroller and everyone is already lined up clogging the path to the jetway door. Nightmare.

Anyway, I booked the flight for us earlier this month and was damned if I was going to pay for carry on luggage.  Why was it cheaper to check a bag? It takes more labor, not less. Same for booking seats online and not at the gate. After learning how much my daughter wanted to pack, I bought a roundtrip for one suitcase for $70. Yes, seventy dollars. You can see the price advantage for the human fare evaporating.

But eat this bird, Spirit, I am not paying to select a seat. They all suck anyway. I chose the random option and it was just as uncomfortable as the paid option.

So we get through security and sit at the crowded gate. Since I did not have a carry on I waited until nearly last to get on. Minimize the discomfort. But I am jumping ahead.

The guy at the microphone then got on to threaten (connotation intended) us that if your personal item did not make the size limit your would have to pay for it as a carry on. $100. One hundred US dollars. Would have been only $50 at the ticket counter, you dopes (well, that's what I felt he was saying). Same for a bag you gate checked, too. "No exceptions!" he bellowed. I took my coat out of my computer bag to make it look smaller. Yes, a totally relaxing experience fearing getting called out to pay more fees.

I am shaking right now as I just checked in for the return flight online but do not have a printer for the boarding pass. Will they charge me a fee to print it at the ticketing kiosk? I would not put it past them.

Let me be fair and say that the flight crew and the flight itself were fine. Smooth take off and landing. Nothing special in the air which is they way you want it. Such a contrast to the evil gate attendant.

We taxi out, wait our turn for takeoff and I notice other planes are passing us. We had pulled out of line and the captain gets on the PA to tell us engine number 2 will not start. It will take 15 minutes to get back to the gate to get it checked out and repaired. I prayed they would not make us or let us get off because that was a half hour minimum to reload the plane.

Now, mechanical problems happen. I cannot fault the airline - or can I? Do you wonder how these cut rate airlines keep prices low? I have no proof but isn't it possible their planes go a few extra miles before that next tune-up? Or they hire one less mechanic and stretch them thin? Notice, I did not question the abilities of the mechanic. The people, save for Dr Evil, are doing their jobs and I must assume they want to be proud in their work.

We arrive at the gate and the captain announces it is a "tow-in" gate.  OK, that's what it is. But then he said it would be five or ten minutes for the tow vehicle to get there. Excuse me? You knew 15 minutes ago we were coming back and you certainly knew which gate was available. Why was the tow not waiting for us instead of the other way around?

Employ one less to vehicle, Spirit?  Or was the driver loading bags on a different flight to save some salary?

It turned out the problem was minor and fixed fairly quickly. Finally, a break. But because the doors were opened, federal regulations required they give us the whole, "this is how you open your seat belt" schpiel again. The flight attendants could only comply. I tried to remove the wedgie I got as I slithered into my spider hole, I mean seat. We eventually took off about two hours late (for a 94 minute in-air flight).

Then comes the fun. Enter the sardine can. Perhaps some soybean oil would have helped us all squeeze into this completely overcrowded cabin. "Sit back, relax and enjoy the flight, we heard over the PA. Clearly, they were on drugs. I wished I were, too.

I measured the seat in front of me was 13 inches from my nose. So much for taking out that laptop. It was hard enough bending and folding my magazine. I hoped the person in front of me would give me a sign when she was about to recline her chair so I could protect my face from assault. Fortunately, I was on the aisle so I could stand up a few times before and during the flight.

Did I say fortunately? Unfortunately, I was on the aisle with my shoulders in the path of the flight attendant with the giant hips. The first time she went by, I appreciated her curves along with a slender waist, pretty face and nice smile. The next 31 times she rammed into me I was not so enamored.  Why couldn't the skinny one at the front of the plane take care of us back here?

One thing about me and travel is that we do not do well together. But I have learned to go into commuter mode with low brain activity and higher tolerance for the scruffy guy across the aisle coughing while his wife makes loud obnoxious saliva clearing noises into their toddler's face. I go into a zone of sorts, perhaps meditating but more likely resigning myself to a waste of several hours of my life.

We arrive at our destination and perhaps 20 minutes later I was able to finally get off the plane. No, they opened the doors on time. It's just that it took longer than I have ever seen for the people in front of me to get off. I could see it was because everyone was packed in so tightly that it took extra long to get out of their seats and extra long to retrieve their bags from overhead via contortions and excuse me's. Meanwhile scruffy was putting on his coat, draping it over other people, gathering his bags, picking up his infant and generally forgetting that his every move touched someone else. I knew a shower was in my near future so I left my commuter mode on. Did someone invent full body Purelle?

Finally, we made our way down to baggage claim. We were the only flight arriving so why did it take more than a half hour for the bags to show up? One less baggage porter? Less maintenance on their systems to get the bags to us?  You truly get what you pay for.

I will never, ever fly this $#!& airline again. No cheap fare would do it. No offer to upgrade to their fat seats for free (call it less bad class, not first class). In fact, the flight attendant came through the cabin with applications for the Spirit credit card (which I laughed at like Mitch McConnell to Timmy Geithner). The instant free flight incentive did not make me want to sign up. I did not want the bonus miles for some other promotion they had. They could have offered me a round-trip to the Caribbean with hotel and transfers I would not subject myself to the nickel and diming price structure, the worry about not following their rules to the tee and getting more fees. How much would a magazine cost me? Next I am sure they are going to go through with the fee for using the bathroom..

Think bout this - if they  want to fly to family vacation locations their idea to charge a la carte is ludicrous. Families must have baggage. They must book seats together, sometimes with a family member in the seat in front of the kicking toddler.

Did I mention I hate Spirit Airlines? I previously hated Delta the most but Spirit wins.

I'll close on a happy note. Mr. Scruffy's infant made a connection with the infant in the row in front of him. It was cute indeed and everyone around ooh-ed and ahh-ed at the pleasant interaction and distraction. What I noticed, and I could be wrong, was that Mr. Scruffy and family seemed to be religious Brooklyn Jews while the family in front of them seemed to be of Arabic descent. The innocent interaction between their infants was indeed a shining oasis in the misery that is Spirit Airlines.

Saturday, November 24, 2012

Hurricane Kudos to MetLife

I am pleased to report that my prop/cas insurance company , MetLife, has already sent me a settlement check for Superstorm Sandy related damage.I found them to be prompt, fair and quite pleasant on the phone and in person.

I highly recommend this company. Not like Northwestern, who dropped me right after I filed a claim for a burst water pipe.

Wednesday, November 21, 2012

Worst financial writing ever (fiction)

I write for several financial media outlets and each one has a dual mission. First, they must inform with cogent analysis and a decent track record of being right. Second, they must hold the reader/viewer's interest by being interesting, if not entertaining. 

Analyst A might have a 90% success rate with an annualized return of 25% but if he puts the viewer to sleep he will not be asked back.

Analyst B always gets the comment "You looked great on TV but I did not know what you were talking about." Eye candy only goes so far.

For written media, headlines MUST grab reader attention. They MUST make the reader curious about what is in the story and want to read it. Unfortunately, they lapse into Pun-Land with a vengeance. With that in mind, here is my worst made up Thankgiving headline and opening paragraph ever:

Stuff Your Portfolios but Avoid the Turkeys

Today, stocks were seasoned by market joy as investors made a pilgrimage to the buy side. With the holiday just around the corner, investors feasted on sweet potato stocks to fill their brokerage account plates. Joe the Trader, senior analyst at Holiday International, added this chestnut, "I love this holiday because profits are easy as pie."

How's that for a bowl full of corn? Kind of makes you want to drown yourself in a cranberry bog.

Happy Thanksgiving everybody! And while you celebrate, don't forget the thousands of victims of Hurricane Sandy still struggling to put their lives back together. 

Monday, November 19, 2012

Finally back after the hurricane

We had no power for 13 days.
No telephone for 17 days.
No TV or Internet for 18 days.

But the house is standing, nothing was flooded and only a few trees came tumbling down. We had it so much better than thousands in the area.  Sayonara Sandy. What starts with "B" rhymes with Sea Watch?

Expect more blogs from us soon.  In the meantime, check out this back of the napkin description of our methods in preparing Quick Takes Pro and gazillions of other things we produce in a week.  This was a question asked by a subscriber and answered in the newsletter Monday morning.

Question - With your unrelenting press of numerous deadlines I know you have to have a systematic way of monitoring all thing macro to micro leading you to eventual security selection. Would you share how you organize your routine and what resources you use to efficiently sort through the enormous quantity of data to get to the promising opportunities?

Answer- You are right about the unrelenting deadlines. My own method is steeped in madness but a lot of it stems from staying plugged into the market all the time.  We follow which sectors are leading and lagging each day. We look at which sectors and stocks are volume leaders. News plays a role but as a reason to check something out, not trade. That decision is based on the charts alone.

Sometimes, there is no theme and you can tell on days when we just have very little to say in the comments section. Unlike traders, journalists (and advisors) have to have an opinion every day. Have your clients given you the "we do not pay you to be in cash" speech? Editors certainly will not keep a columnist on who writes, "Nothing to say to today" or "Same as yesterday."

We plow into various lists of stocks with blunt force, not the precision cut of a rigid system. Markets change and that means systems have to change - all the time. We have not time to maintain them under such fluid conditions so it is better to stick to nuts and bolts, human nature based analysis as humans do not change. We won't find that monster winner but if we happen to stumble on it at least we'll ride it for a good chunk of change.

Friday, November 9, 2012

Blame High Prices for the Gasoline Shortage

Uh, what? Higher prices created less product not more? My Econ 101 professor is rolling over in his grave (I don't know if he is actually dead but go with it).

Remember in the fun days of 2008 when gasoline was heading toward $5 per gallon? Remember back even further when there were four gas stations on many corners in populous areas? You toddler traders with only 10 years experience are too young for that, I suppose.

But in 2008, I blogged Where Have All the Gas Stations Gone. It was hard to understand why they were disappearing especially when their products were soaring. Reader comments were awesome - basically saying that gas station profits were steady while inventory costs went up. Credit Card companies took a percentage leaving the station owner with a few cents revenue out of which they had to pay expenses and taxes. A big chunk for the oil company, a big chunk for Uncle Sam and a little chunk for Amex. Chaff for the station owner.

Lower profit margins and unfavorable cash flow (pay for inventory now, get paid by customers in 30 days or more). Result - Your local Esso station (toddlers?) is now a Walgreens. Your local Sinclair station is now a Wells Fargo.

The station density became inadequate to serve the population.

And then there's Maude, er, Sandy. Li'l Miss hurricane blew out a good chunk of the gas stations in the Northeast. Remember, the number was already low so this was -and still is - a big problem.

So, higher prices for gasoline in a fixed profit, not fixed profit percentage business and viola! Gas shortages.

Now, where is that hamster powered generator. Ain't no gas to fill up a real one to get the pumps working at gas stations sitting on thousands of gallons that they cannot pump. You cannot make this stuff up.

Saturday, November 3, 2012

No power, no problem

No power, no problem?  Well, let's just say I'm doing things the old fashioned way.

No, I am not out back churning butter by hand but I am washing the dishes with a sponge and some soap. Kind of makes you appreciate re-using a lightly used plate and fork.

How about this one? Talking face to face. My neighbor from across the street came over to see if I knew what was going on with the power restoration. She introduced herself (we'd met already) but had a nice little chat. I learned how she was coping and where she grew up. She even told me a little fact about firewood but I am not sure I believe her.

Another neighbor got a generator and we chatted about it at the end of the driveway. She took my laptop for a charge because you can't charge these puppies via USB in the car like cell phones of iPods.  I brought her a small space heater for her somewhat frail mother-in-law.  It felt good to be neighborly.

What was really fun was using that fire pit we had built in the back yard. Frivolous, in good times but it produced some heat and more importantly a little family time. Fire roasted hot dogs taste absolutely awesome. And of course, slow roasted marshmallows are everyone's favorite.

Meanwhile, the grill was put to good use feeding us. Aside from cooking up everything in the freezer before the ice ran out, it heated the water for morning coffee (still got to use my french press) and grilled frozen bagels. Grill lines on burgers are one thing but on bagels? They added a nice smokey flavor that complemented the last bits of cream cheese very nicely.

And grilled baked ziti. Now that was good. Who does not like the noodles at the edges when they get nice and crunchy?  But that was not the only pasta dish as we boiled up a pot of water for more pasta and pan roasted some chopped veal with fresh onions, some tomato paste (manual can opener) and the last splash of jarred sauce from the fridge (Emeril's). I need the gym to re-open and soon!

From homemade applesauce to a full box of frozen hors d'oeuvres heated in a foil pan, starving we are not.  getting that second tank of propane before the storm was a good idea.

With no TV, we've been going to bed a bit earlier. We've also been BLISSFULLY spared election news, polls and spin. Worth the price of admission all by itself. Imus in the Morning on the radio - not so bad. When he is not being a self-centered curmudgeon, Imus is a darn good interviewer. And when constant storm coverage got depressing, a quick flip of the analog dial on my battery powered radio and there was sports radio WFAN. Good thing I am a Giants fan and not a Jets fan or I'd still be depressed.

What's next? Writing letters?  Riding my bicycle down to the market for some milk and eggs?  Raising my own vegetables in the back yard?

Who knows? While I do look forward to returning to the modern world it was good to learn that unlike so many  people around me I would not be eaten by wolves if left to my own devices in the woods.

Wednesday, October 31, 2012

Sandy's Luxury Camping

While I am certainly impacted by Hurricane Franken-Sandy it is certainly not to the extent of those near the shorelines. We had very little rain on Long Island and since I live miles from the coast there was no flooding at all. Wind damage is another thing and monster trees are down everywhere, including on the electric and phone lines from the street to my house.

But with a box full of batteries, three cars topped with gasoline and two propane tanks for the barbeque we actually doing pretty well on the energy front. The laptop gets charged at a friend's house where there is electricity and a desk where I will write my column later today.

Time to think about the modern world. Look how dependent we are on "the system" that brings us an abundance of food, power, entertainment and other supplies. For those of us who ever rode out a few days of blackout, our stashes lasted just fine. But I have been thinking of the power company's warning that we'll be out 7-10 days. At some point, laptops, cell phones, battery supplies and gasoline for generators will run out. Then what? You can't just run down to the corner to fill up as their power is out, too. And for a while, Long Island was actually fully cut off from the world as bridges, tunnels, airports and shipping were all shut down. Stop and Shop is not getting a truckload of milk and bread so fast.

I am not advocating becoming a doomsday prepper but if, (insert deity of choice) forbid, our modern supply chain is cut off for say a month it is not like we can go out into the woods and hunt some Kobe beef. Or drop a line and pull up some Chilean sea bass. Or harvest some baby arugula.  Not here on Long Island in November in the shadow of New York City.

Just a thought. We are not as in control as we think.

With that, I must say that this is the most luxurious camping trip I have ever taken. We have a full grill, king size beds, waterproof roof and wind proof walls, internet (granted, stolen from the neighbor's unprotected WiFi) and a pantry full of canned goods. And I have learned to listen to the radio for entertainment.

Of course, this is all stored food and energy and eventually it will run out. But while it lasts things are really not so bad (again, my house is standing so we have it good compared to others).

Tuesday, October 23, 2012

Investors not welcome

I run a daily chart-oriented newsletter and as I was preparing for this morning's missive the Dow was of triple digits in the premarket. I thought back to a customer who called to cancel his subscription just yesterday. His comments were not that unusual as he said (paraphrased) I like the service but it is a bit short-term for me.

Now, I do not run a day trading service but the average recommendation is probably on the order of three weeks. It's not intentional but with the absence of a secular bull market you have to take profits when you can and cut losses a lot sooner than you might do otherwise. It leads to plenty of whipsaws.

On my screen was a chart of the "market" and I thought to myself, "How can any investment advisor be in this business now when the average stock is trading where it was a month ago, six months ago, 18 months ago and four years ago? How about six years ago?

This is the NYSE composite.

We've all read about the lost decade for stocks and now here we are a few years later than that and the S&P 500 is still no better than it was in 2000. It managed to climb back in 2007 before falling to and even lower low than it saw in 2002. And today in 2012, even without today rout, the index is below both of those previous peaks.

For professionals and astute active individuals, there were some monster money-making trends to follow over the years. When I say money-making, I mean in spades. But you have to be willing to sell when things look great and buy when things look terrible. And you have to know when the minor trend is changing to sidestep problems or be sure to buy even more at the right time.

Buy and hold may be dead (for now) but advisors cannot risk calls from clients when the market moves down 10% with them in it or moves up 10% with them not in it. Traders had plenty of opportunity. Investors were left out in the cold.

I do not get how airlines make money and I do not get how portfolio managers with long-term views make money (other than gathering assets to make their management fee).

OK, here it comes. Managers will come back to me to say they made plenty.

Well, good for you. How did you do it?

We saw the valuations in 2009 and bought.

Great! How is your 10-year track record?

Umm.  We beat the S&P 500.

You did? Bully for you. So did drinking beer and collecting the deposits on the cans and bottles.

Sorry to be snarky but unless someone trounced the market they only outperformed a mediocre asset class.  If you were up a few percent and the market was flat then your are a relative hero. Does the client have enough money to retire after 15 years of investing?

I do not mean to put down portfolio managers but to really take advantage of things you had to be a market timer of sorts over the past decade. No, you did not have to buy and sell daily or even weekly. But cyclical moves must be timed, not matter what valuations say.

My opinion. What's yours?

Friday, October 19, 2012

Happy 25th Aniiversary!

Here are some musings from this morning's Quick Takes Pro newsletter (subtle hint - take a free trial).

It is hard to believe it was 25 years ago today that the Crash of '87 sent the financial world into panic. Funny how there is always something out there to accomplish that same feat whether it be a tech bubble, housing bubble, debt bubble, tulip bubble or simple exuberance bubble that happened some eight years before Alan Greenspan made it irrational.

I was a green technical analyst; actually not yet an analyst at all since I had just started working with a financial information vendor only weeks earlier. I was also a kid who spent most of his young career peddling municipal bonds at Merrill Lynch. The novel "Bonfire of the Vanities" was also released that year and while I was not drinking magnums of Dom at Delmonico's, I was close to the whole 1980's style excess described in the book. I even held a check in my hand - for about 30 seconds - made out to a New York State municipal agency for $225 million after we underwrote a muni bond offering.

The crash rendered analysis of all kinds almost useless but after the volatility calmed down and the Earth actually kept spinning on its axis, analysis returned. I sort of feel the same way today as it seems that with QE out of the way the free market is trying to regain its power. Charts still need to be treated with salted kid gloves but we believe they are starting to regain our trust.

Wednesday, October 17, 2012

Europe Saves the Market - again

This time in video format. Enjoy!

Scroll down to the Oct 11 post where I threw down the gauntlet to Super Mario Draghi to save the market for the third time. Lo and behold (how regal!), Spain did it by proxy.

Thursday, October 11, 2012

You're up Mario

I touch on the timing of ECB and Fed intervention in my Barron's Online column today. It seems that they happened lately at the 50-day average and newly formed rising trendline from June.

The problem is that both central banks have barely implemented their new plans let alone are ready for more. China and other central banks tried but they did not move this market.

So now what? Mario, it's your turn if the pattern is to continue. What's that? You are out of other people's money? Surely, Angela Merkel's welcome by Nazi garbed protesters in Greece will put everyone in a pocketbook opening mood.

Tuesday, October 9, 2012

Market Sheep

I really don't have a ground breaking post for you after a week of having my daughter in the hospital (and wife staying with her - everyone came home today). But I do have something that just hit me this morning.

Pandora is on everyday as I work. Today, Pink Floyd's "Sheep" (from the Animals album, 1977) was on and the lyrics reminded me of the stock market. See if you agree.

Harmlessly passing your time in the grassland away;
Only dimly aware of a certain unease in the air.
You better watch out,
There may be dogs about
I've looked over Jordan, and I have seen
Things are not what they seem.
What do you get for pretending the danger's not real.
Meek and obedient you follow the leader


Wednesday, October 3, 2012

Fed and Stocks

There are many visuals overlaying Fed meddling in the markets with the stock market itself. This is my favorite from a blog called Calculated risk. Here is the URL for this particular June 28 post - which I suppose I am re-blogging (like re-tweeting)

If you think the Fed printing money mattered (in a positive way) for the economy, I've got a bridge to sell you. But if you think it mattered to the stock market, here is your proof.

The Fed (and ECB) are out of goose juice. What do you think will happen now?

Tuesday, October 2, 2012


...can prevent portfolio fires.  Ben is putting them out with gasoline, which, by the way, has made gasoline prices go up (among other reasons).

More unintended consequences from the government's misguided plan - persistently low interest rates is hurting savers (Ben wants everyone to buy risk assets). But it is also hurting Social Security, which is mandated to invest in Treasuries.

Ooops!  Sorry folks.

Thursday, September 27, 2012

Print Baby Print!

In the midnight hour, she cried more, more, more
With a rebel yell, she cried more, more, more
In the midnight hour, babe, more, more, more
With a rebel yell, more, more, more, more, more, more
(Rebel Yell, Billy Idol 1983)

That's right, folks, the good people in the People's Republic of China are stepping up to deliver more free money!  That's right, although not confirmed, it looks like number 2 is in the mix again. Keep in mind numbers 1, 3 and 4 have done their part. For you dismal science types, that would be the USA, Japan and the Eurozone.

On our social media, I posted this: Doing the same things over and over and expecting different results (referring to the Fed's announcement of QE4 - that's right four - scheduled for December.).

I am sure most of you recognize this as Einstein's definition of insanity. In a Krugman-esque way, all of these central bankers must think they should have done a massive, huger, collosifical stimulus of maybe 2 gazillion dollars, not the puny billions here and billions there. Could it be they do not understand that what they did cannot work? Must be. Otherwise they are stupid or liars. Far be it from me to call these people such names because they are where they are and I am writing a silly blog.

So they do not understand that they are doing more of what won't work.

Is it any wonder that gold hit an all-time high against the euro and Swissie today?

Monday, September 24, 2012

September Seasonal

Most market followers know or at least have heard that September is the worst month of the year. It is the only one with a net negative return over the decades and when there is an October surprise (that means crash) the pain really started in September.

There is another little seasonal pattern this time of year but it is not nailed down to the calender. Well, actually it is - the lunar calendar, not the solar calendar we are all used to using. Before getting into it, let me digress a bit about the lunar calendar.

Chris Carolan, publisher of the Spiral Calendar advisory, wrote a 1998 Dow Award winning paper called "Autumn Panics" and as the c-word above suggests, it is about autumn stock market smashes. I am going from memory on this one but this time of year is the seventh month of the calendar and that is where a good deal of these panics occur. That means sometimes it is in September and sometimes it is in October.

Guess what month it is right now?

Let's be clear that not all month 7s are panics. In fact, most are not. But it is a delicious tidbit of technicals, isn't it?

Back to the topic of this post. While the September seasonal is not living up to its reputation thanks in no small way to Ben and Mario, the seasonal that does seem to be working so far is based on the Jewish Holidays. Sell Rosh Hashana and buy Yom Kippur. Or, in English for 2012, sell Friday Sept 21 close and buy Wednesday Sept 26 close (it may be Sept 27 open but that is not the point of this story - you are free to get the details elsewhere). The idea was that many investors square up positions to avoid distraction during prayer and after the holiday they return to work.

Check this chart from this morning's Quick Takes Pro newsletter.

This was printed before the open Monday but so far, so good with the seasonal trade. No, its not like buying Apple or shorting Facebook but a little reliable profit is an very underestimated luxury.